The Invesco UK equities manager, and former protege of Neil Woodford, was responding to a Morningstar downgrade of his Invesco High Income and Income funds that had previously been managed by his predecessor.
Morningstar had raised concerns Barnett was increasingly adding companies lower down the market-cap spectrum prompting comparisons with Woodford, who increasingly turned away from large-cap exposure in his flagship Equity Income fund before it ultimately ended up in the process of being wound down.
“I have reduced the total exposure to unquoted investments across all my funds from £994m to £493m,” Barnett said. “The capital released has either been used to fund redemptions or reinvested elsewhere in the portfolio to generate future growth. Today, unquoted investments account for just c.5% of total assets.”
Approximately half that exposure is in Oxford Nanopore.
‘Under my stewardship the funds have chartered a very different course’
While Barnett has repeatedly defended his positioning, the letter represented his most public attempt to distance himself from Woodford, who he replaced as manager on the High Income and Income funds when the latter left Invesco to set up his eponymous fund house in 2014.
He described comparisons as “inevitable” but said “under my stewardship the funds have chartered a very different course and it cannot be overstated that the portfolios I manage are very different”.
He said: “We only have access to public data. However, based on the last reported holdings of the Woodford Equity Income fund, at the time that WIM suspended operations, we believe that the overlap with my portfolios was less than 15%.” Any two diversified UK equity income portfolios in the market today would very probably have comparable crossover, he added.
‘I invest within a different risk and oversight framework’
Barnett not only distanced himself from Woodford’s portfolios but also the corporate infrastructure at Invesco compared to Woodford Investment Management.
“I invest within a different risk and oversight framework,” he said.
“At Invesco, I am not just accountable to my investors. Invesco is a global business with long-established compliance, risk and legal functions, which I am subject to. I am also accountable to teams of highly experienced and qualified professionals, as well as an experienced senior management team. I am supported to make independent investment decisions yes, but I am also accountable and well challenged.”
Woodford is reported to have found compliance at Invesco restrictive.